Health spending projections through 2016: modest changes obscure part D's impact

Area of Science:

• Health economics
• Healthcare policy
• Public health spending analysis

Background:

• National health spending growth has shown a slowing trend for four consecutive years.
• The health sector's share of gross domestic product (GDP) has historically trended upward.
• The introduction of Medicare prescription drug coverage has altered drug spending distribution.

Purpose of the Study:

• To project national health spending growth trends for 2005-2006.
• To forecast the health sector's share of GDP through 2016.
• To analyze the impact of Medicare prescription drug coverage on aggregate spending.

Main Methods:

• Analysis of national health expenditure data.
• Economic projection modeling for healthcare spending.
• Comparative analysis of pre- and post-Medicare coverage drug spending.

Main Results:

• Projected slowdown in national health spending growth from 6.9% (2005) to 6.8% (2006).
• Health share of GDP expected to stabilize in 2006, then rise to 19.6% by 2016.
• Accelerated prescription drug spending growth to 6.5% in 2006; minimal net effect on aggregate spending from Medicare coverage.

Conclusions:

• National health spending growth is moderating in the short term but expected to increase as a percentage of GDP long-term.
• Prescription drug spending is a key driver of future health costs.
• Medicare prescription drug coverage is unlikely to significantly alter overall national health expenditure trends.